AI in insurance: Overhyped or underestimated?

There are a lot of different technologies that make up AI, including machine learning and RPA. (Photo: Shutterstock)

Technologies in the artificial intelligence family have great potential in insurance, according to a recent SMA survey of P&C insurance executives. This should come as no surprise to anyone following the developments in machine learning, natural language processing, computer visioning, chatbots, virtual assistants, and other related technologies. After a long and varied history of AI technologies (including the lengthy AI winter), we are now on the verge of the golden age of AI. At least that’s the storyline most have bought into. But in the context of the insurance industry, is the potential of AI overhyped? Or, despite all the enthusiasm, is the ultimate impact even underestimated?

To answer those questions, it is necessary to examine the technologies and their possible uses further. There is no one easy way to express the potential of AI for P&C insurance. And much of the actualization depends on the time frame. It is important to recognize the many different technologies that comprise the AI family. Insurers see the highest potential in machine learning, robotic process automation (RPA), and technologies to analyze unstructured data (natural language processing, data mining). RPA implementations, in particular, are taking off like rockets in the industry. Insurers of all sizes are already leveraging the technology to automate routine tasks. Many projects are also underway using machine learning to assess risk and identify fraud (among other things). So, value is already being delivered, and insurers are moving forward with AI-related projects for specific technologies.